Asia shares edge higher, sterling slugged by UK politics
Asian share markets crept higher on Monday following favorable US jobs data, while sterling slipped after two members of the British government resigned over Brexit and put the future of Prime Minister Theresa May in doubt.
The pound peeled off around a third of a US cent to USD 1.3292 GBP=D3 in early trading as news broke British Brexit Secretary David Davis and Brexit Minister Steven Baker had resigned.
The loss came just two days after a meeting at May’s Chequers country residence supposedly sealed a cabinet deal on Brexit and underlines the deep divisions in her ruling Conservative Party over the departure from the EU.
Sentiment in other markets was mostly positive after Friday’s US payrolls report showed tame wages and more people looking for work.
“The combination of rising employment and increased labor force participation suggests healthy but not tightening labor market conditions in June, something that will allow the Fed to continue to hike rates at a gradual pace,” said Kevin Cummins, a senior US economist at RBS.
The balanced report helped Wall Street end last week in the black and Japan’s Nikkei followed up with gains of 1 percent on Monday.
MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.2 percent, on top of 0.7 percent rally on Friday when the launch of US tariffs on Chinese imports came and went without too many fireworks.
“While trade tensions fan concerns about the future, incoming data show a soaring US economy, a healthy labor market, and some rebound in Europe and Japan,” said Barclays economist Michael Gapen.
“For now, overall policies and financial conditions still support growth and investment,” he added. “A sharper-than-expected China slowdown from a domestic credit crunch and external trade tensions could be the main risk to global growth.”
The focus this week would be on Chinese data for June covering inflation, new loans and international trade. The United States also releases inflation figures, while the Bank of Canada might well hike rates on Wednesday.
In currency markets, the US dollar was mostly softer following the jobs report, with sterling being an exception.
Against a basket of currencies the dollar had pulled back to 93.925, from a top of 94.486 on Friday. The euro held its gains at USD 1.1750, while the dollar was flat on the yen at 110.48.
In commodity markets, oil prices were little moved in early trade after a mixed end to last week.
US crude futures CLc1 gained 2 cents to USD 73.82 a barrel, while Brent LCOc1 eased 1 cent to $ 77.10 a barrel.
Gold was little changed at USD 1,256.39 an ounce.